Insurance companies doing well against 'gloom and doom' time, says HDFC Life

Updated : August 28, 2019 01:43 PM IST

Vibha Padalkar, managing director and CEO of HDFC Life, on Wednesday said that insurance players were doing well amid the 'gloom and doom' time.

“This is a culmination of what we have been working towards — to educate the average Indian to say that we should focus on transferring risk to an insurance company — and that is what is playing out,” said Padalkar while speaking to CNBC-TV18.

HDFC Life Insurance Company Limited has managed to grow at a heady pace of over 40 percent so far this year.

“Insurance companies are relatively defensive stocks, also most of our assets are held-to-maturity, so the horizon is much longer-term, which means that there is lesser focus than what is happening here and now as long as the long-term fundamentals of India as an emerging market (EM) are intact,” Padalkar said.

However, at current levels, HDFC Life is an expensive stock, according to SBICAP Securities.

“Post a bad calendar 2018, the insurance stocks — life and general both on the private side — had a very great 2019 so far. So if you have to look at the likes of the HDFC Life or SBI Life, the stocks are up anywhere 40 percent plus year-to-date (YTD). Now the valuation has caught up a lot. At this valuation, you will have a relatively lower comfort as a sector. Given the structural story of the under-penetration particularly on the mortality and the longevity aspect, you will have a long growth runway for the term life or a pension, annuity related products," said Avinash Singh, research analyst for SBICAP Securities.

“As far as my pecking order is concerned, in the sector, SBI Life is my top pick followed by Max Financial, ICICI Prudential. HDFC Life is a very amazing franchise, very ahead in terms of innovation whether in terms of products or distribution. It is a valuation where I have a relatively lower comfort,” he added.

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